The Dubai Financial Services Authority (DFSA) has launched a new crypto regulatory framework.
According to a statement distributed by the DFSA, they have monitored market developments over the past three years, while working with policy counterparts and industry insiders to ensure the new rules are globally aligned while supporting digital asset innovation.
Charlotte Robins, Managing Director, Policy & Legal of the DFSA, saidthe changes to the Crypto Token regime reflect their stance on innovation and proactive response to market developments.
“These updated rules provide firms with greater clarity and flexibility, and ensure that our regulatory crypto token regime remains aligned with international best practice. As digital assets continue to evolve, our objective remains clear – to maintain a transparent and predictable regulatory framework that safeguards market integrity and enables sustainable and responsible market development in DIFC,” said Robins.
One highlighted change is that firms providing financial services with crypto are now directly responsible for determining, on a reasoned and documented basis, whether each digital asset they engage with meets the DFSA’s suitability criteria. The DFSA stated that it will no longer publish a list of Recognised Crypto Tokens.
The updated framework aims to provide a “clearer and more structured pathway for activities involving Crypto Tokens, including trading, fund and asset management, custody, advisory, and related financial services.”
A firm must be authorised by the regulator prior to engaging in crypto services.
Stablecoins are subject to a dedicated Policy Statement on Fiat Crypto Tokens, separate from general Crypto Tokens in certain suitability assessments.
Crypto Token activities are said to be supervised on a risk-based basis, with a focus on:
- Governance and accountability: senior management oversight and clear accountability
- Financial crime controls: AML/CTF systems appropriate for Crypto Token risks
- Custody and safeguarding: appropriate arrangements for client Crypto Tokens
- Technology resilience: secure, resilient infrastructure, and operational continuity
- Market conduct: fair treatment of clients and market integrity
As the US has updated the law to enable payment of stablecoins and Congress is nearing comprehensive regulation to outline a digital asset framework, other jurisdictions are preparing to do the same.
The DFSA has published a dedicated section of its website outlining the new framework.